International Flavors & Fragrances Inc. Reported A Surprise Loss, And Analysts Have Updated Their Forecasts

International Flavors & Fragrances Inc. (NYSE:IFF) last week reported its latest yearly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Things were not great overall, with a surprise (statutory) loss of US$10.05 per share on revenues of US$11b, even though the analysts had been expecting a profit. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for International Flavors & Fragrances

Taking into account the latest results, the 20 analysts covering International Flavors & Fragrances provided consensus estimates of US$11.0b revenue in 2024, which would reflect a discernible 4.0% decline over the past 12 months. International Flavors & Fragrances is also expected to turn profitable, with statutory earnings of US$1.55 per share. In the lead-up to this report, the analysts had been modelling revenues of US$11.4b and earnings per share (EPS) of US$1.70 in 2024. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

Despite the cuts to forecast earnings, there was no real change to the US$84.29 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on International Flavors & Fragrances, with the most bullish analyst valuing it at US$130 and the most bearish at US$69.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the International Flavors & Fragrances' past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 4.0% by the end of 2024. This indicates a significant reduction from annual growth of 25% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.4% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - International Flavors & Fragrances is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$84.29, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple International Flavors & Fragrances analysts - going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for International Flavors & Fragrances (1 is significant!) that you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.